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Land troubles may delay Sasan project

Land troubles may delay Sasan project
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First Published: Fri, Jan 25 2008. 01 06 AM IST

Updated: Fri, Jan 25 2008. 01 06 AM IST
The 4,000MW ultra mega power project at Sasan, which is being developed by Anil Dhirubhai Ambani Group’s (Adag) Reliance Power Ltd at an investment of around Rs20,000 crore, has run into issues related to the acquisition and allocation of land. One government official familiar with the development admits this could lead to a delay in the completion of the project.
Meanwhile, the Union government has asked Reliance Power to reduce its land requirement for the project from 3,723 acre to 3,280 acre, a 12% reduction.
The project at Sasan, one of the government’s 11 planned ultra mega power projects which were seen as a way to boost the country’s power generation capacity as well as attract private sector investments in power, has been controversial from the start, with the original winning bidder being disqualified and the project being awarded to Reliance Power. Now, it turns out, there are issues with land acquisition and allocation.
“The government has asked for a reduction in the land required for the Sasan project...,” said a senior Union government official involved in the land allocation process who did not wish to be named. “We have asked them (RPL) to optimize the land use for the project to 3,280 acre now. Anyway, only 77 acre of land has been acquired for the project till date,” this official added.
The government owns 1,700 acre of the land, 900 acre of which is forest land. It needs to acquire the remaining land in keeping with the way ultra mega power projects are structured.
One of the ways in which the government hoped to make UMPPs more attractive for private sector companies was by securing all the clearances and acquiring the land required for such projects.
“There are some issues regarding the land acquisition. The land for the site is priced at around Rs1.5 crore per acre,” said a senior official in the Madhya Pradesh government who did not wish to be identified.
The Union government official said Reliance Power was yet to provide a schedule for the project because there were problems in land allocation. “Any delay in allocation will affect the project’s commissioning,” he added. The official said that the Union government had met with representatives of Reliance Power, the Madhya Pradesh government, and states that will buy power from the Sasan project—Haryana, Punjab, Delhi, Uttar Pradesh, Uttarakhand and Rajasthan.
The original deadline for land allocation was April. Now, it looks unlikely that this will be met. “Land acquisition is a key concern for large infrastructure projects. Since power project developers have bid very competitively for UMPPs, the government should also participate with covering their part of the risk, which is primarily land allocation,” said Arvind Mahajan, executive director at audit firm KPMG.
An Adag spokesperson declined to comment on the development because the company is in a so-called “silent period” prior to the listing of its stock as specified by stock market regulator Securities and Exchange Board of India (Sebi).
Reliance Power’s initial offering of shares, which sought to raise Rs11,790 crore from the market, was subscribed 73 times over. However, the stock is yet to list on the exchange. Since the issue closed on 18 January, however, India’s bellwether stock market index has fallen 9.42%.
Optimal use
The Union government official said there was a need to “optimize” land requirement for “thermal power plants.”
“We have found out that comparatively larger area was being made use of for setting up thermal projects in our country as compared to other countries,” the official added.
The Central Electricity Authority (CEA), the top planning body for the power sector, prepared a report on land use by thermal power plants.
“The power project developers should explore the ways for having a further possible reduction in land requirement...to reduce the overall requirement for the power plant. Since the availability of suitable land and its acquisition is getting more difficult day by day, it was felt essential to optimize the plant layouts and thereby to reduce the overall land requirement for thermal power plants.” the CEA report said.
Reliance Power plans to commission the Sasan project using six units of 660MW each. According to the CEA report, a project with such specifications should not use more than 3,280 acre.
A consortium of Lanco Infratech Ltd and Globeleq had initially won this project, but their bid was disqualified because of a change in the constitution of the consortium.
The project was later awarded to Reliance Power.
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First Published: Fri, Jan 25 2008. 01 06 AM IST